Now we’re all goin’ to gas!

When I wrote the article, "Solar? Wind? Forget it ... we're goin' to gas", my main concern was the difference between what the Government says and what it actually does, and that the importance of revenue means the government has no genuine interest in truly green alternative energy sources. When I investigated I was alarmed by the extent to which vested interests - both private and government - in non renewable resources have a mindset of abusing power, maximising of profits and socialising losses. The big end of town gets its way: at the top by putting pressure on politicians; in the middle by circumventing regulation and at the bottom by walking over any “little man” who gets in its way.

This could hardly be better demonstrated than by listening to Belinda Robinson of the Australian Petroleum Production and Exploration Association, who said recently on World Today that special concessions were necessary in any emissions trading scheme because:

… we could end up in the situation, because Australia is the only producing country of LNG [Liquefied natural gas] - which is subject to greenhouse gas emission reduction obligations under the Kyoto Protocol - … in the situation where we, in Australia, find it difficult to maintain our international competitiveness with other countries that are producing LNG.

We … are number five exporter of LNG at the moment. We have ambitions of being number two or number three in the world … but it is important to say that only while ever that policy distortion is in place … it would be necessary to ensure that the competitiveness of the Australian LNG industry is not undermined … through a variety of mechanisms in an emissions trading scheme.

… It is not so much about seeking special treatment. This is about seeking a level playing field.

She said on more than one occasion that she didn't like asking for those concessions, and so she should: what use is a carbon trading scheme that gives concessions to fossil fuel producers?

When government policies involve "distortions" of the free market it is because government policy, and not free market outcomes, should reflect the will of the nation. If Australia as a country ratifies the Kyoto Protocol does not the government intend that we should all be bound equally to bear the burdens of achieving its aims? So is the gas industry trying to jump the gun, to obtain its carbon tax concessions before a flood of similar applications based on the competitive disadvantage of being environmentally responsible?

Every informed Australian knows that Australia isn't prepared for peak oil, even though experts have long warned our government to plan for it. We all realise that interim energy measures, inevitably imperfect, must urgently be put into place to maintain responsible economic stability, but the government and the energy sector seem to forget that this is the only planet we have!

The article "Forget it, we're goin' to gas" generated local concerns too, particularly when I examined the structure of the gas industry itself, its relationship to government and its relationship with, and accountability to, its ultimate consumers.

In Australia, the Crown - which you may be amused to remember means all of us in a true democracy - owns petroleum resources, including natural gas. Both the Australian Government and the State and Territory governments sell rights in relation to these commodities to the private sector in exchange for taxes, excise duties and royalties.

The fact that the production chain requires large capital investments, and that our governments don't have any money - as they keep telling us, notwithstanding recurrent budget surpluses - means that commercial arrangements in the sector typically involve significant private investment in exploration and infrastructure. This is in exchange for advantageous pricing approvals, with substantial returns on investment built in, and profits hidden by confidential long term contracts for gas supply and transport both in Australian and overseas.

"Investors" like confidentiality and don't like regulation unless it provides them with security or certainty: governments like and need money, and so they accommodate the investors.

Regulation of the gas industry is already quite limited, particularly given the unique nature of gas as a valuable resource with a very promising future, and is tending towards further deregulation.

The problem is that it is too much of a one-way street. At a time when there is a limited supply but unlimited demand (and when the potentially deleterious side effects of misusing resources like water and oil and gas have been driven home to us) we are privatising our common interest in these resources and letting the privateers loose in a 21st-century neo-conservative frontier.